Do firms really seek to maximize profits?
What will be an ideal response?
Profit maximization is difficult because management needs a great deal of information about revenue and cost in order to maximize profit. In addition, management may have other goals, such as philanthropy, or members of a management team may not always agree on goals or means to obtain them. Therefore, this assumption is an oversimplification.One suggested alternative goal is satisficing. As explained by Herbert Simon, this goal is common in much of industry and government. Because information is costly, firms may settle for less than maximum profit.
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What is the main difference between an instrument rule and a targeting rule? Be sure to define each
What will be an ideal response?
If you were a member of the NBER business-cycle dating committee, would you declare that the U.S
economy is now in a recession? Why? Describe the major variables that you would look at to determine whether the economy is in a recession or not, and what features of the data you would look for.